Whilst major front-haul routes slide through September, fears grew of (realised) port strikes on the US East Coast and persistent risks in the Red Sea linked to escalation between Israel and Hezbollah.

Key Points

  • FBX03 Asia-US East Coast index values slide through September. However, FBX03 futures values inside of Q4 are forced into contango (forward prices higher than spot prices) as the market prepares for liner General Rate Increases. FBX03 Q4 trades at $8650/FEU despite a drop in spot rates (however, trading below September settlement).
  • FBX11 Asia-Europe prices continue to collapse, sitting behind the price action on futures that had priced in a lower spot rate weeks in advance, attracting buyers for FBX11 Q1’25 and Q2’25
  • FBX11/13 spreads narrow to near parity (we discussed the inversion of this spread and the trading opportunity in the last monthly commentary).
  • Market participation is expanding in line with greater uptake for index-linked contracting.

FBX03 Asia-USEC Q4 has traded at $8,650/FEU, just shy of the September settlement of $8,999 but a tick above spot prices on 1 October. This represents a 23.57% increase from trade to trade (prior last done at $7,000/FEU). Port strikes have also started to drive buying interest on FBX01 Asia-US West Coast on the assumption that disruption into the US East Coast will result in more shipments into the US West Coast. 

Asia-US

Short- to mid-term outlook for Transpacific freight rates (primarily head haul into the United States) has been dominated by the looming impact of striking dockworkers on the US East Coast – led by International Longshoremen Association President James Daggett. Despite some wild claims of a $30,000 spot rate for containers into the US East Coast – FBX03 Asia-USEC Q4 has traded at $8,650/FEU, just shy of the September settlement of $8,999 but a tick above spot prices on 1 October. This represents a 23.57% increase from trade to trade (prior last done at $7,000/FEU). Port strikes have also started to drive buying interest on FBX01 Asia-US West Coast on the assumption that disruption into the US East Coast will result in more shipments into the US West Coast. Market participants will also have to contend with cargoes finding their way into Canadian ports and the potential for port congestion due to the shutdown of US East Coast ports.

FBX11/13 spread had reached near parity (changing positive/negative throughout the month), closing up what was widespread through most of 2024 – FBX13 pricing at a substantial premium up until September. Price direction faced another just prior to Golden Week – onshore markets on INE going limit up on the last day of September, dragging up FBX11 Asia-Europe offers and potentially inverting the months old arb between FBX and INE.

Asia-Europe/Mediterranean

Asia-Europe/US parity starts to diverge, with more price action in the US. Spot prices started to degrade through the start of September on FBX11 Asia-North Europe, down -27.61% from the start to the end of September. FBX11 futures prices, however, had tracked well ahead of this move, with Q1’25 hitting a mid-value low of $2,500/FEU mid-month (Braemar), with settlements tracking above this. FBX11/13 spread had reached near parity (changing positive/negative throughout the month), closing up what was widespread through most of 2024 – FBX13 pricing at a substantial premium up until September. Price direction faced another just prior to Golden Week – onshore markets on INE going limit up on the last day of September, dragging up FBX11 Asia-Europe offers and potentially inverting the months old arb between FBX and INE.

Physical

More a general summary that falls in line with the development of freight futures and a wider sense that more dramatic price swings in container rates (and their associated fundamental drivers) are here to stay. Index-linking has anecdotally started to pick up more traction across modes (including the development of index-linking on airfreight). This provides more of a stable basis for volumes on futures, which already benefit from the strong volumes available onshore in China.

About Peter Stallion, Freight and Energy Derivatives, Braemar

Peter Stallion heads up the Container Freight and Cross-commodity desks at Futures brokerage Braemar Securities Ltd - a part of Braemar Shipbroking. He started his career in air freight chartering, and helped launch FBX-settled Container FFAs, and has a passion for emerging risk management markets and the logistics industry.


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